Working Out the Kinks: Cannabis Distribution Is Still Hitting Roadblocks

Almost two full months after sales of recreational marijuana started in Las Vegas, there is still one issue that remains unresolved: distribution. As of now, alcohol distributors have exclusive rights to the industry for the first 18 months at market, but there are very few providing service to cultivators and dispensaries so far.

One company, Blackbird Logistics, has been handling most of the distribution from cultivator to dispensary for the recreational and medical markets. As the first company to receive the go-ahead to deliver cannabis, the transportation and delivery business had to partner with Crooked Wine in order to start deliveries. The company has almost doubled in size since July 13 to meet demand. Tim Conder, co-founder and CEO of Blackbird, says that the expansion is allowing them to finally catch up.

“We’ve been insanely busy. Right now, we’re serving 80 to 90 percent of the market, if not more. It’s been pretty difficult to keep up. As of this week we’re getting to be fully caught up and back to where we were in the medical market.” Their strides to meet the demand have become apparent to their clients, but the problems have yet to be solved.

“Distribution has picked up fairly well since the initial TRO was implemented. There are still some issues ongoing with the industry vs. IADON [Independent Alcohol Distributors of Nevada], but it has drastically improved over the past month,” says Gustavo D’Arthenay of Thrive Cannabis Marketplace.

If it’s up to medical marijuana establishments, the distribution component would be open to other businesses outside of alcohol distributors. On August 10, the Department of Taxation decided to allow other potential licensees to meet the high demand of the industry. But the IADON has pushed to keep the exclusive rights in-house. Most recently, an appeal has halted any movement and will be reviewed by the tax commission on August 29.

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Evan Marder from Matrix NV is passionate about this issue, as it directly affects his business. “It has been an arduous process,” he says. “The continued attempt to block the medical marijuana facilities from obtaining distribution licenses has done nothing but hurt the rollout of recreational marijuana in our state.”

He also believes the alcohol industry’s ambivalence about the cannabis industry is a setback. “Delivering marijuana is very different from any other industry for several reasons, and this needs to be accounted for when deciding how an industry should work,” he says. “The state understands this and has been doing their best to fix this situation, but the liquor companies suing the state keep halting their efforts.”

The issues with delays in deliveries don’t only affect the cultivators and dispensaries. Another business, The Weekend Box, which produces aggregated kits containing a curated supply of cannabis flower, concentrates and edibles, has been feeling the delay as well. Krista Whitley, the proprietor of Social Media Unicorn and the creator of The Weekend Box, knows firsthand how the lack of competition affects how she can serve her customers.

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“We, of course, have to purchase from licensed cultivators and licensed production [facilities]. And what distribution did initially for us,” she says, “was have delivery drivers from, let’s say Matrix, bring their flower up to our licensee up in Reno. Initially this distribution challenge put us behind three weeks in launching. So, we had all these thousands of dollars in orders that we weren’t able to close on until the distribution was solved.”

Although distribution licenses are a hot topic at the moment, there are other policies and processes that slow down the flow. Handling the bulk of deliveries is one thing, but one overlooked aspect of the process that Blackbird struggles with is storage. “We’re not allowed to store product for more than 24 hours. So all of the deliveries we’re doing are on demand. Which makes things difficult,” Conder says. “There are dispensaries near Lake Tahoe that need product from Las Vegas, and coordinating the transportation of that product and the pickup and delivery within 24 hours is very complex.”

After the tax commission meets and decides on the most recent appeal by IADON, the potential for the market to open to those outside the alcohol industry is possible. If that happens, then the blooming industry will have a chance to meet its full potential.

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